Commodity Trade Mantra

Posts Tagged ‘Devaluing the Yuan’

Why Devaluing the Yuan Won't Help China's Economy

The slowdown in China’s economy was set in motion when the yearly rate of growth of the money supply fell from 39.3% in Jan 2010 to 1.8% by Apr 2012. The effect of this massive decline in the growth momentum of money puts severe pressure on bubble activities. Any tampering with the currency rate of exchange can only make things much worse as far as allocation of scarce resources is concerned.

China chooses her Weapons after IMF statement on SDR regarding Yuan

China is not so much devaluing the yuan, but causing a dollar revaluation upwards relative to international trade prices. She is aware that the US economy is in difficulties and that the Fed is worried about the prospect of price deflation, so lower import prices are the last thing the Fed needs. Now China’s currency move begins to make sense.

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